Do I have to be on line to be able to fax?

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No. But, you must use a dial-up modem to Fax. Cable and DSL
cannot dial out on the phone. Some DSL users can get filters to
be able to Fax and Cable subscribers can use eFax.com, which is
a 3rd party commercial fax and not free.
 
Some more things to consider.

IP telephony solutions, such as Skype and Yahoo! Messenger with Voice, will
allow you to dial a phone with your computer. However, I have not seen one
that claims to support faxing. In order to integrate with Microsoft Fax, I
suppose they would have to implement a TAPI provider. I'm not sure.

Software can automatically dial your modem without your consent. Beware that
if you are using the Internet while your modem is hooked up and you are
infected by malware, it may dial the modem. I am a knowledgeable user who
takes every precaution, but I was once the victim of malware that exploited
a Windows flaw and injected code onto my computer that dialed a 1-900 number
to download more spyware. I could have stopped it by unhooking the phone
line if I had realised. All I did to be exposed was look at a web page
containing a malformed graphic.

Paul
 
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